After reaching USD 170 billion in 2020, Vietnam’s retail industry is expected to grow at a CAGR (compound annual growth rate) of more than 10% over the projection period, 2021-2026. With the country’s increasing urbanization, new urban customers are driving significant development in modern retailing channels such as convenience shops and the rapid rise of e-commerce. This rise in the retail scene in Vietnam presents lucrative foreign investment opportunities in the sector.
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Moreover, despite covid compilations, Vietnam managed promising economic growth in the second quarter of 2021. Compared to a 12% growth in 2019, Vietnam’s retail sales expanded by only 2.6% in 2020 due to low consumer demand due to covid. However, in the first quarter of 2021, Vietnam’s retail sales began to recover, growing at a pace of 5.1%. Furthermore, E-commerce in Vietnam hit a tipping point in 2018 with 60% penetration in major cities and is now expected to cross 80% in 2021, mostly due to Covid.
This article talks about the prospects of investment in Vietnam’s burgeoning retail industry.
Consumer Trends in Vietnam, 2021
On average, the disposable income in Vietnam is anticipated to rise rapidly, reaching USD 3,062 per capita by 2023. Vietnam’s Consumer expenditure is expanding at the fastest rate in the SEA region, at more than 8% a year, from USD 118 billion in 2013 to USD 185 billion in 2019. Additionally, private spending accounts for more than 67% of the country’s total gross domestic product.
Moreover, Vietnamese consumers desire for their cities to be like their more modern counterparts, Singapore, Hong Kong, etc, and they take tremendous pride in the country’s economic and social progress. The health- and safety-driven consumer demand has left open a welcoming door for investors to invest in Vietnam’s resilient and striding Retail Industry.
Logistics in Retail Industry in Vietnam
The Retail Industry in North Vietnam is in high demand for contract logistics, as robust domestic consumption helps the economy leverage the trend and escape recession. The Vietnamese market has a lot of promise for retailers, despite rivalries prevalent in the market. Moreover, with e-commerce as a key growth driver of storage and logistics demand in Vietnam, conventional retail accounted for the majority of the growth.
Technology in the Retail Industry: Update 2021
Digital acceleration as a result of technological development is one of the most talked-about topics to emerge from the pandemic. With the pandemic driving digital interactions, the majority of retailers anticipate a sustained rise in demand for digital engagements by the end of 2021. A few CEOs believe their companies’ digital capabilities are mature, and as a result, many are lacking “substantial” expenditures in e-commerce, contactless technology, and retail technology improvements.
While having a digital touchpoint may help businesses fulfill minimal consumer expectations, as customer acquisition expenses grow, companies should seek extra capacities to differentiate themselves. The new retail guideline is to seek new income sources, such as subscriptions or memberships, as well as develop new partnerships and alliances, to create a lucrative and digital ubiquitous experience in the long run.
Digital Transforming Retail
Shopping, online experiences, and even customer expectations in physical businesses have all been changed by digital transformation. The upheaval caused by the COVID-19 pandemic has flipped the industry on its head, albeit bringing with it unprecedented technical advancements. It is expected that this digital transformation will be permanent even after the pandemic, or its restrictions will end.
It’s critical to think about where these breakthroughs will lead us next by recognizing the technological trends that have led us through 2020 and 2021 and will continue to do so in the years ahead, driving the demand for investment in retails, logistics, and e-commerce in Vietnam with lucrative returns.
How Can Cekindo Help?
Investing in or setting up a retail or e-commerce business in Vietnam can be a time-consuming process. Cekindo’s comprehensive business solution services will not only assist you with registering your company but will also ensure that you stay on top of all legal compliances. Following incorporation, we also provide tax and accounts outsourcing services.